MTD for Landlords
A step-by-step roadmap for Making Tax Digital compliance for individuals with rental income over the threshold.
Key Takeaways
- MTD for Income Tax Self-Assessment (ITSA) is being phased in from April 2026.
- Landlords with property income over £50,000 must comply first.
- Quarterly digital updates to HMRC replace the annual tax return.
- Compatible software must be used to keep records and submit updates.
What is Making Tax Digital?
Making Tax Digital (MTD) is the UK Government's initiative to modernise the tax system. For landlords, it means using HMRC-compatible software to maintain digital records of rental income and expenses, and submitting quarterly summary updates instead of a single annual Self Assessment return.
Who is Affected?
From April 2026, landlords with gross property income over £50,000 per year must comply. Those earning between £30,000 and £50,000 follow from April 2027. There is no current timeline for those below £30,000, though future expansion is expected.
Expert Tip
“Even if you're below the threshold now, adopting MTD-compatible software early avoids a rushed transition and gives you cleaner records for any HMRC enquiry.”
Quarterly Updates
Instead of one annual return, you'll submit four quarterly updates summarising income and expenditure, followed by an End of Period Statement (EOPS) and a Final Declaration. The quarters follow standard periods: April–June, July–September, October–December, and January–March.
Choosing Compatible Software
HMRC maintains a list of MTD-compatible software. Popular options for landlords include FreeAgent, Xero, and QuickBooks. Your software must be able to store digital records, calculate tax obligations, and submit quarterly updates directly to HMRC via their API.
Penalties for Non-Compliance
HMRC is introducing a new points-based penalty system. Each late submission earns a point; once you reach the threshold (typically 4 points for quarterly reporters), an automatic £200 penalty applies. Late payment penalties accrue interest from day one, with additional charges at 15 and 30 days overdue.
PropCompliance Advice
Start keeping digital records now — even before the mandate — to build a clean data history and avoid last-minute migration headaches.
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